LONDON: European stock markets dropped Monday as investors weighed the chances of the US trimming its huge stimulus package this year.
London's commodities-heavy FTSE 100 took a knock on slumping oil prices and as haven investment gold lost some of its shine, while stock prices in both Frankfurt and Paris were also in the red.
The dollar was mixed against its biggest rivals, while the pound traded at 18-month highs against the euro after the Bank of England last week eyed tighter monetary policy as UK inflation soars.
Most Asian stock markets closed higher Monday, but investors remained cautious as last week's forecast-beating US jobs report fanned speculation that the Federal Reserve could begin tapering emergency financial support.
"A very hot jobs report from the US on Friday has left investors expecting the Fed to taper earlier," noted Neil Wilson, market analyst at Markets.com.
Offsetting hopes of a strong recovery are spiking infections around the world from the Delta coronavirus variant, forcing the world's second-biggest economy China to reimpose lockdowns and other containment measures.
Data from the United States showed the world's biggest economy created 943,000 new jobs in July, while the June reading was also revised higher to more than 900,000.
It renewed concerns that to prevent overheating, the Fed will start to wind down the ultra-loose policies -- including record-low interest rates and a vast bond-buying scheme -- that have been integral to an equity market rally since April last year.
The central bank has continuously stressed that it will maintain its accommodative stance for as long as the economy needs to recover, but with inflation at multi-year highs and jobs returning, it is coming under increasing pressure to act.
Chinese factory prices rose more than expected in July, data showed Monday, as recent surges to commodity prices offset government measures to temper costs.
Oil prices fell as the fast spread of Delta raised concerns about the outlook for demand, particularly in China, with both main contracts were down almost four percent.
With global inflation surging on largely reopened economies, National Australia Bank's Rodrigo Catril said there was "not a lot of disagreement on a taper announcement coming sometime between September-December" from the Fed.
Still, US investors remain broadly upbeat, with the Dow and S&P 500 ending at all-time highs Friday.
On Monday, Bitcoin steadied after surging more than 20 percent over the weekend to more than $45,000.
Analysts said cryptocurrencies were enjoying a recovery after weeks of being buffeted by Chinese moves to crack down on the sector.
On the corporate front, shares in Deliveroo shot up nearly 10 percent after the British takeaway app revealed German rival Delivery Hero had bought a five-percent stake in the group.
Shares jumped to £3.56, but were still far from Deliveroo's flotation price of £3.90 in March.
Key figures around 1045 GMT
London - FTSE 100: DOWN 0.4 percent at 7,095.54 points
Frankfurt - DAX 30: DOWN 0.2 percent at 15,731.95
Paris - CAC 40: DOWN 0.1 percent at 6,812.79
EURO STOXX 50: FLAT at 4,174.98
Hong Kong - Hang Seng Index: UP 0.4 percent at 26,283.40 (close)
Shanghai - Composite: UP 1.1 percent at 3,494.63 (close)
Tokyo - Nikkei 225: Closed for a holiday
New York - Dow: UP 0.4 percent at 35,208.51 (close)
Euro/dollar: DOWN at $1.1753 from $1.1765 Friday
Pound/dollar: UP at $1.3885 from $1.3877
Euro/pound: UP at 84.63 pence from 84.74 pence
Dollar/yen: DOWN at 110.16 yen from 110.21 yen
Brent North Sea crude: DOWN 3.7 percent at $68.10 per barrel
West Texas Intermediate: DOWN 3.9 percent at $65.63 per barrel